With no Budget relief, phone cos seek continuation of sops

CHENNAI: Mobile phone and parts manufacturers are lobbying for continuity of duty conditions that led to a grounds well in electronics manufacturing since 2015 and one of the key factors for Taiwanese phone-maker Foxconn trying to take over the shuttered Nokia plant which knocked India off the phone export global map with its closure.

Phone-makers have expressed concern that the latest Budget had few markers that committed to incentives for making in India. The Indian Cellular Association, which counts Apple and Google as its members, is pursuing its case with the central ministries to ensure duty advantages stay and are expanded under the GST regime.

Pankaj Mohindroo, the national president of the Indian Cellular Association, however, was confident that the finance ministry would soon make up for the Budget lapses: “There has been an oversight. There are more verticals like keypads and such that need to be announced under the Phased Manufacturing Programme. We are certain it will be implemented and no one should hold back investment plans due to this lapse.“

Multiple phone makers had set up factories in clusters around Noida, Uttar Pradesh, and in Andhra Pradesh and in other states after a counter-vailing duty imposed by the Centre in its 2015 Budget that made it cheaper for brands to make in India than import from China.This move was followed by with si milar duty regimes for batteries, chargers, and adapters. Called the Phased Manufacturing Programme, the concept was to expand the incentive establishment to many other avenues in electronics manufacturing to touch a target of making 500 million phones, ` . 50,000 crore from the components industry and generate employment of 15 lakh workers by 2019-20.

The Fast Track Task Force, set up to accelerate phone and part manufacturing in the country, had led to 35 new plants and 15 factories for components in the one year up to August last year. With the Budget 2017 showing little promise and little assurance of the Goods and Services Taxes regime perpetuating these duty incentives, the manufacturers are worried.

Sasikumar Gendham, managing director of Indian subsidiary of Finnish firm Salcomp, said: “Thousands of jobs and crores have been invested with the duty differential as a key contributor. In three years, Indian manufacturers may not need them. But now, they are necessary. Many Chinese suppliers are looking at these tax conditions to invest in India,“ he said.Salcomp, which runs a sole factory inside the 212-acre Nokia SEZ, is buying another factory to expand operations. Gendham said companies have begun dialogues with officials with the central government. “While they are seized of the matter, clarity is yet to emerge on how things will look under GST,“ he said.

The $150-billion revenue company Foxconn is amidst its second inning in the country after Nokia's closure. The Apple phone manufacturer had expressed interest in the Nokia factory, but had laid out clear conditions, among others, that the tax liabilities that did in the factory should not be brought back to haunt Foxconn. Another industry representative with knowledge of Foxconn India operations said: “It is important that an ecosystem for not just phone makers but also suppliers to make in India. For foreign makers, a demonstrable, repeatable policy structure is required to take India seriously.“

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